BEIJING, Oct 12 (Reuters) - Chinese banks made 623.2 billion yuan worth of new loans in September, the People's Bank of China said on Friday, slightly lower than market expectations for 650 billion yuan.
-- New bank lending in September at 623.2 billion yuan
-- Total social financing in September was 1.65 trillion yuan
NIE WEN, ANALYST, HWABAO TRUST IN SHANGHAI:
"The total social financing aggregate grew at a fast pace in September, mainly coming from undiscounted bank acceptances and corporate bonds.
"The central bank seems to have shifted its focus more on the social financing aggregate to steer its monetary policy. So from this sense, the new lending data of 623.2 billion yuan is still within a reasonable range, though a bit lower than expectations.
"As corporate bonds and bank lending tilt more towards state enterprises, private sector firms are still facing relatively tight cash flows.
"With the property market showing signs of recovering and consumer prices become more stable, the central bank may cut the reserve requirement ratio in the fourth quarter to lower borrowing costs."
SHEN JIANGAUNG, CHIEF ECONOMIST, MIZUHO SECURITIES IN HONG KONG:
"The new yuan loans in September are lower than market expectations, but it is not a surprise since domestic media have reported that China's top four state-owned banks extended fewer new loans in September than compared to August.
"The fall in new lending shows the central bank might have taken measures to control credit supply given the higher-than-expected reading in August.
"Liquidity conditions are still tight in China and I think the central bank should cut RRR as soon as possible."
SUN JUNWEI, CHINA ECONOMIST, HSBC IN BEIJING:
"The new yuan loan data is slightly lower than market expectations, but we should also pay attention to the total social financing aggregate, which is quite a strong figure and reflects the effect of policy loosening.
"We should notice that the proportion of bank lending in the total social financing pool has decreased over recent quarters and we should give more stress to other financing channels, such as corporate bond issuance, when gauging the total liquidity in the economy."
STEPHEN SCHWARTZ, ASIA CHIEF ECONOMIST, BBVA IN HONG KONG:
"I would call that number broadly in line with our expectations (650 billion yuan)... but we still have yet to see a meaningful pick up in any of the activity indicators.
"This is a good forward indicator of investment. We're still expecting growth to begin picking up in the fourth quarter based on more stimulus, especially after the leadership transitition is settled.
"Our outlook is for a gradual pickup from the recent slow momentum into 2013. We're going with a growth outlook of 7.9 percent for next year. Our projection is down, we've lowered that, we had 8.3 previously."
For details, see the People's Bank of China website at
MARKET REACTION: Mainland Chinese share trading had closed for the week ahead of the data, ending the week on a choppy note ahead of trade statistics due at the weekend. The CSI300 Index
gained 0.5 percent for the week. The Chinese yuan
had earlier firmed against the dollar on Friday, hitting an intraday record high for the second straight day.
-- China is targeting total lending of 8 trillion yuan for 2012, sources told Reuters early this year.
-- Chinese banks beat market expectations in August by extending 703.9 billion yuan of new yuan loans, reinforcing bets that the government is relaxing loan restrictions to bolster flagging economic growth.
-- The People's Bank of China, the central bank, pledged last month to "fine-tune" monetary policy to cushion the economy against global economic headwinds while closely watching the possible impact from recent policy loosening in the United States and Europe.
-- China's central bank has cut interest rates twice in a spate of one month from June to July to shore up the economy.
-- The central bank has also cut the amount of cash banks must keep in reserves three times since November, freeing up an estimated 1.2 trillion yuan ($190 billion) for new lending.
-- In the absence of any stimulus package, Beijing has fast-tracked some infrastructure projects and injected cash into the economy via central bank's open market operations.
(Reporting by China Economics Team; Editing by Nick Edwards)
Keywords: CHINA ECONOMY/MONEY